Knowing The Right Time To Purchase A Home In Texas Pt2

Important Things To Consider When Buying A Texas House

Part 2

What’s the most important thing that you should be remembering? You want to be certain you are in the right financial position in order to purchase a home irrespective of what is going on in the world. Consider these 3 things.

1. The Stability Of Your Income

First and foremost, you should be looking at this. Consider how likely it is that you are going to continue to have a stable income for the entire duration of the global pandemic. You want to consider whether or not your position is going to be safe in the current climate. Consider whether or not you have enough funds set aside in order to make the much-needed payments if you were to lose your income. If you are currently in a career that has a lot of uncertainty and that is prone to a lot of changes, you will want to hold off on purchasing a home until that changes.

2. Your Budget

You will need to pay a lot more than the down payment in order to purchase a home. You will need to pay for everything from the inspections to the appraisals to the loan origination costs, and more. Therefore, if you find yourself in a position where you are feeling unable to pay for everything, you will want to avoid purchasing a home.

Another big-budget consideration: Don’t necessarily allow your pre-approval status and amount to determine the total cost of a home you are wanting. A lot of prospective homeowners get pre-approved for a much higher mortgage than you can actually afford. Because of this, you should look at several things including your spending to ensure that you are figuring out the right budget. From there, you will be able to speak with your lender in order to translate that to a mortgage payment. You want to be able to afford the home you purchase.

3. The Reason For Buying A Home

You want to consider why you are looking to purchase a home. Maybe it’s because you just got married. Perhaps you are adding to your family. Or you might be looking to downsize prior to retirement. There are plenty of reasons you might be interested in purchasing a home. If your why isn’t necessarily good enough, perhaps you should hold off.

It’s important to understand that purchasing a home will effectively allow you to experience many of the highs and lows that come with it. If that doesn’t sound like something you want to deal with, it might be best to hold off.

While there is certainly no harm that can come from browsing the market, there is a big difference between looking to see what’s out there and buying. If you are looking to eventually buy a home, now is a fantastic time to begin looking for your next dream home.

The Texas Mortgage Pros

The Texas Mortgage Pros consists of some of the best professionals in the state of Texas. We are fully committed to providing the highest level of service to all of our clients. You will be able to take advantage of the best rates and multiple loan programs that are available in your area. We have mortgage professionals with years and years of experience who will be willing and able to work directly with you in order to guarantee that you are able to get a home loan that is curated to meet your needs and expectations. No matter if you are purchasing your dream home or your first home, we have the professionals on staff in order to ensure you get the best rates and the right program.

In order to speak with one of our friendly and experienced professionals, give us a call right now. We look forward to assisting you to find the home of your dreams. Click here to go to the first article in this series.

Knowing The Right Time To Purchase A Home In Texas Pt1

Important Things To Consider When Buying A Texas House

Part 1

Because of mortgage rates being so low because of the uncertainty caused by the pandemic, you may be thinking it might be the right time to consider buying a home. However, experts say you might not want to rush into such a decision. Below, we will be going over why according to real estate experts.

The Housing Market State

While the current market does offer inherent benefits for anyone looking to purchase a home. After all, in March the median list prices were up at around 2.2 percent annually. However, a month later, that number went down to less than 1 percent. This ultimately represented the least amount of growth in the last 7 years. As such, mortgage rates have been at a record low with the average 30-year fixed rates sitting at 3.4 percent for the week leading up to May 1.

Buyers are currently looking for 30-year mortgages and rates are very low. Because of this, it has become an opportune time to effectively purchase a home and take out a mortgage due to the historically low rates effectively outweighing the potential uncertainty that the pandemic has led to.

However, you shouldn’t simply be basing your real estate purchasing decision off this respective price drop. While the home prices in the market are expected to continue to fall around 2 to 3 percent just this year, you will find these prices fluctuating all of the time. You will pretty much always see properties that are priced outside of the market falling. Whereas, you will find properties that are competitively priced in the current market changing in prices very little.

What you really need to look at isn’t necessarily the decrease in home prices, but the increased demand for viable buyers. After all, your home could be competitively priced but you wouldn’t have any demand if there is no one that is capable of affording the home in the current conditions.

What If You Are Able To Find A “GOOD DEAL?”

While you may be tempted to simply jump on the first good deal you are able to find, you don’t want to get fixated on it. For one, you won’t necessarily be limited to finding ‘good deals’ in the midst of a crisis. Ideally, you want to try to identify a home that sits in the spot of being currently undervalued in the market and one that sits in a good neighborhood that has a lot of higher valued properties. This is what we refer to as a ‘diamond in the rough.’ You will certainly be able to find some good deals in the marketplace. However, all of the great deals are usually purchased before they even hit the open market.

Your timing is more important than anything. Even more so than being able to find a good deal. This will usually indicate how well you are able to do on the market. Generally, you will find buyers paying around market value for the homes they purchase, no matter what the circumstances lead to. While it’s certainly true that markets have both peaks and valleys, the real estate market is usually one of the more predictable markets and investments that usually have a steady upward trend. The timing will usually dictate how well you fare in any market.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.

Decided To Have A Texas House? Here’s Initial Payment You Should Prepare

The Down Payment You Should Pay When Purchasing A House In Texas

Down payments are initial payments made when buying something under some form of hire purchase This means that a buyer first pays the initial installment, usually the highest amount of money, after which they can pay the rest in intermittent installments. When it comes to purchasing a house, the down payment you set aside is critical.

Lenders consider the amount that you pay upfront to be the stake you’re willing to put on your new home, hence it will influence the loan amount. The down payment also determines the probability of private mortgage insurance (PMI) as a requirement by the lender. As a rule of thumb, most, if not all lenders will require PMI if the downpayment is less than 20% of the house’s value. It also affects the interest quota. Without a doubt, the higher the down payment, the lower the rate of interest.

Evidently, there’s a lot to think about with regards to making down payments when purchasing a new home. Primarily, the amount to pay initially depends on the cost of the home and the loan program you’re working with. Normally, the amount will be anywhere from 5% to 20%, but lenders vary, and so do their percentages. Some key aspects to consider include:

1. The Loan-To-Value Ratio

The initial installment is used by your lender to calculate the loan-to-value ratio (LTV) of the home. This is one of the factors a lender considers in extending a client’s credit. They also look at debt to income ratio as well as personal credit scores in relation to the LTV. This makes the LTV an important consideration when deciding the amount of down payment to make.

The loan to value ratio is the amount you’re obligated to pay after making the first deposit on the house. It is usually represented a percentage, which is, in essence, is the ratio between the principal amount, to be paid in installments at regular intervals and the estimated value of the house. The higher the initial payment, the lower the loan amount, hence the lower the loan-to-value-ratio. In detail, it is calculated as:

loan-to-value (LTV)= Loan amount/appraisal value or purchase price (The lesser amount is used)

Consider the following scenario:

Mr. & Mrs. Smith wish to buy a house whose purchase price is $200,000 while it’s appraised value is $205,000. The former, being lower will be used by the financial institution to decide the loan amount. If Mr. & Mrs. Smith decide to pay a downpayment of $40,000, she needs an additional loan of $160,000 to fulfill the asking price. In this case, the loan to value equation will be:

loan-to-value (LTV)= Loan amount/appraisal value or purchase price so,

LTV= $160,000/$200,000

LTV= 0.8 which in percentage(multiply by 100) is 80%

2. Private Mortgage Insurance (PMI)

As stated before, a down payment of less than 20% requires a backup PMI. This is because the financial institution stands to lose a lot in case you decide to default the loan, having financed an impressive 80% and above of your purchase. With an LTV as high as this, the lender is investing a tremendous amount, and to protect their risk, comes the insurance. Paying PMI, in turn, increases your monthly installment amounts.

Conclusion

Before deciding on the down payment for the property, assess the pros and cons that come with lending institutions. Would you rather pay a private mortgage insurance every month, even without knowing whether you’ll manage to be a homeowner in the long run, or does it make more sense to wait till you have a surmountable amount to pay as a down payment? With these two financial aspects to consider, the ball is in your court.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today!